The crucial sentence that could decide whether Charter Spectrum stays in New York

Updated August 10, 2018 at 11:02 AM;Posted August 10, 2018 at 10:41 AM

In an unprecedented action, the state Public Service Commission on July 27 ordered Charter to leave the state within six months, pay a $1 million fine and file within 60 days a plan to transition its Spectrum-brand network of cable television, broadband and telephone service to another provider. (Staten Island Advance File Photo)

Syracuse, N.Y. -- A legal battle that could decide whether Charter Communications, the largest cable company in New York, leaves the state or stays may hang on a single sentence in a key document.

The sentence appears on Page 53 of a 69-page New York State Public Service Commission order approving the merger of Charter with Time Warner Cable in 2016:

"In order to ensure the expansion of service to customers in less densely populated and/or line extension areas within the combined company's footprint, the commission will require New Charter to extend its network to pass ... an additional 145,000 'unserved' (download speeds of 0-24.9 Mbps) and 'underserved' (download speeds of 25-99.9 Mbps) residential housing units and/or businesses within four years of the close of the transaction."

In an unprecedented action, the commission on July 27 ordered Charter to leave the state within six months, pay a $1 million fine and file within 60 days a plan to transition its Spectrum-brand network of cable television, broadband and telephone service to another provider.

It was a drastic step. The commission ruled that Charter has repeatedly failed to meet its requirement to extend its network to rural areas with little to no high-speed internet service. Charter has instead been performing much of its build-out in New York City, entirely served by one or more broadband providers already, the commission said.

But this is where the sentence comes in: Charter's lawyers contend that the wording of the commission's merger approval didn't exactly require the company to extend its network in rural areas.

In documents, the lawyers argue the words "less densely populated" in the opening clause of that sentence simply explain its motivation for requiring, later in the same sentence, that the company extend its network past 145,000 more premises. Hey, there's a comma there, they seem to be saying.

The company said the reference to less densely populated areas is "merely prefatory language explaining that the commission believed that the expansion of service to unserved and underserved homes and businesses would yield benefits to such areas because that is where many such homes and businesses are located." That's why the commission started with "in order to," the company argued.

Charter said many, but not all, unserved and underserved homes and businesses in New York are in rural areas. But it said the commission did not specify rural areas.

If the commission wanted to limit Charter to certain areas, it should've spelled it out in the second half of the sentence or somewhere else in the order, the company said.

"Indeed, as a matter of policy, an explicit geographical limitation would have prioritized some unserved and underserved New Yorkers over others, suggesting that New Yorkers in urban environments who lack access to high-speed broadband services are somehow less deserving of the commission's concern," the company said.

Charter has vowed to fight a years-long legal battle, if necessary, to stay in New York. It's likely that any lawsuit it files will use the same arguments it made in its filing with the commission.

In response to the filing, the commission said the company's arguments are merely an attempt to avoid its build-out obligations in rural areas. It said the "plain text" of its order makes it clear that Charter was required to extend its network in less densely populated areas.

The commission could potentially impose $9 million in additional fines against the company, on top of the $3 million in fines it has already imposed. But it said that prospect does not seem to be much of an incentive when Charter "stands to save tens of millions of dollars by failing to live up to its build-out obligations in New York."

Further, it said New York City could not possibly be considered an unserved or underserved area of the state, calling it "one of the most-wired cities in America."

Editor's note: Advance/Newhouse Partnership, which has an ownership stake in Charter Communications Inc., is part of Advance Publications, owner of Advance Local. Advance Local owns Syracuse.com, NYUP.com and The Post-Standard.